NEW YORK, Aug 15 U.S. stocks fell on Friday
after tensions flared in Ukraine, prompting investors to recoil
from risk, but major indexes cut their losses in late trading
and were on track for another week of gains.

The tech-heavy Nasdaq turned positive in the afternoon,
lifted by gains in stocks like Microsoft and Applied
Materials.

Markets had opened higher on hopes of easing tensions
between Russia and Ukraine, but shed those gains following the
statement from Ukraine, which added later that its forces had
come under shellfire from Russia.

Russia's Defense Ministry denied its forces had crossed into
Ukraine.

The CBOE Volatility Index, a measure of investor
anxiety, rose 9.1 percent to 13.55, in heavy volume. Investors
rushed to safe-haven bonds and the 10-year Treasury note yield
dropped to near 2.32 percent, its lowest level since June 2013.

With earnings season winding down, the market has been
sensitive to developments between Russia and Ukraine. Despite
the day's losses, stock indexes remained on track for their
second straight week of gains, and the S&P 500 remained less
than 2 percent away from a record close in July.

"While we've had a lot of negativity hit the market lately,
I don't think it has really sunk in for the long-term yet," said
Adam Hewison, president and chief executive at INO.com in
Annapolis, Maryland.

"It's like the never-ending story with Russia and Ukraine -
you don't know what to believe, but the reality is that it's an
ongoing problem and that it's a question of when investors
decide to say, 'Enough is enough, I'm going to cash in.'"

The Dow Jones industrial average fell 45.04 points,
or 0.27 percent, to 16,668.54. The S&P 500 was down 0.35
points, or 0.02 percent, to 1,954.83. The Nasdaq Composite
added 10.36 points, or 0.23 percent, to 4,463.36.

U.S. manufacturing output rose broadly in July and
automobile production recorded its largest increase in five
years, but other data showed some cooling in factory activity.
U.S. consumer sentiment fell in August.

Monster Beverage Corp jumped 29.7 percent to $92.93
as the S&P's biggest gainer after Coca-Cola Co said it
was buying a 16.7 percent stake in the company for $2.15
billion. Shares of Coca-Cola rose 1.7 percent to
$40.87.

The Nasdaq was also lifted by Applied Materials Inc
, up 5.5 percent to $22.31, a day after quarterly
earnings beat expectations.

On the downside, GameStop Corp shares fell 5.4
percent to $39.57. The stock was the biggest loser in the S&P
500.
(Editing by Bernadette Baum, James Dalgleish and Nick
Zieminski)

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